Winning with money does not come easily for many people. While some are natural savers and planners, others of us like to use our money to satisfy our wants here and now. In other words, delayed gratification is not a strong suit. Nevertheless, if we want to win with money we have to learn how to spend more wisely. We’ve got 3 keys to spending money wisely that will help you win.
3 Keys to Spending Money Wisely
1. Think Long Term
Winning with money does not happen overnight. It is the result of doing the little things the right way over the long term. So learn now to delay gratification and organize your spending so that you’ll be a winner when it is time to retire.
Living only for today won’t end well.
We all want to have fun and enjoy our lives but living entirely for now without planning for the long term won’t end well. If you don’t want to live in your kids’ basement one day, you’ll need to live for more than just now. Spending money wisely means thinking long-term.
- Make and use a zero-based budget that includes room for paying off your debt and saving for the future.
- Begin investing and saving for retirement today. It is never too late. The old Chinese proverb says “The best time to plant a tree was 20 years ago. The second best time is now.” Begin investing now.
Consider future responsibilities.
You’ll be able to spend money wisely when you are leaving room for your future responsibilities in your spending decisions.
- Spending money wisely means always keeping your eye on the future. What we want now and what we need long term are very different things. So submit your spending decisions to a budget that is pre-planned and considers both here and now as well as the future.
- Spending money wisely means using personal discipline to make smart choices. If you always feel broke, it is because you are not organizing your money in a way that acknowledges reality. Leaving your future responsibilities out of your spending is not a wise thing to do and will leave you broke when it is time to retire.
2. Have a Plan
“Tell your money where to go or you will wonder where it went.” If you are not actively submitting your money to a plan, on purpose every month it will leave you. Use a budget, have a plan and you’ll be able to spend more wisely.
Create goals.
Money goals help you spend money wisely by giving you a reason to delay the gratification that comes from spending your money now. Once you have a goal, you can create a plan to achieve it. Ask yourself how much money you need to save to reach your goal then break it down by how much progress you need to make each month or year to reach your goal. Goals help us keep our money pointed in the direction of what really matters.
Use a Budget.
A budget is a plan for your money before the month begins. It helps you assign your income to a job according to your plan. Without a budget, you will spend money like a ship drifting in the ocean without a rudder. Your money won’t have a direction and your financial life will be lost at sea. A budget is a plan for your money. If you want to spend your money wisely, use a budget.
3. Behave Accordingly
“Choose what you want most, over what you want now.” The best plans are no match for the inability to make yourself and your money behave. If you have a good plan, trust it and make your spending habits behave according to the plan.
Evaluate all of your decisions through the lens of your plan.
Plans without execution are useless. So even the best plan without any personal discipline is likely to fail. Spending money wisely means evaluating all of your spending decisions through the lens of your plan and your budget.
Choose what you want most over what you want now.
Ultimately, spending money wisely is a choice. If you are unable to choose what you want most over what you want now, you’ll struggle to achieve any goal and your plans will be wasted. Being able to regulate our behavior means more than our diet and exercise. It extends to our financial lives as well. If you want to win with money, you’ll have to behave according to your plan.
Wrap up. Keys to Spending Money Wisely.
Spending money wisely means thinking in the long term and using a plan to reach your goals. Without a long-term vision supported by a plan to reach your goals, your money is likely to be used on other things. A budget is the key to winning with money over the long term and is executed through the daily discipline of making your money behave. Using a budget, in concert with a plan and personal discipline will lead to long-term success. “Choose what you want most over what you want now.”
